A Blog of Members of the Administrative Law and Regulatory Practice Section of the American Bar Association

Friday, March 1, 2013

Agency Spotlight: DOL OFCCP Replaces Compensation Guidelines

by Lynn White

On February 28, 2013, the Department
of Labor (DOL), Office of Federal Contract Compliance Programs (OFCCP) published
a notice rescinding two guidance documents related to compensation
discrimination. OFCCP enforces nondiscrimination and affirmative action
requirements for federal contractors. The agency rescinded the Interpreting
Nondiscrimination Requirements of Executive Order 11246 with respect to
Systemic Compensation Discrimination (Standards) which outlined “analytical
procedures” for issuing a Notice of Violation based on compensation
discrimination. OFCCP also rescinded the Voluntary Guidelines for
Self-Evaluation of Compensation Practices for Compliance with Executive Order
11246 (Voluntary Guidelines) which created a method for contractors to evaluate
their own pay practices. The agency initially proposed
the rescissions on January 3, 2011.

Removing Barriers to Enforcement

OFCCP Director Patricia A. Shiu stated that the Standards
and Voluntary Guidelines created arbitrary barriers to “finding and combating
illegal pay discrimination.” In particular, the Standards applied to pay
differences among workers in specific job categories, leaving little room for
analysis of other factors like discrimination in job assignments and unequal
access to promotional opportunities. OFCCP further asserted that the Voluntary
Guidelines gave employers the flexibility to analyze pay data based on their
interpretation of how to apply the guidelines. If the interpretation was
reasonable, the Voluntary Guidelines required finding contractors in compliance
even if a different analysis suggested pay disparities.

Issuing Clearer Guidance

OFCCP issued Policy Directive 307 (Directive 307) to replace
the Standards, Voluntary Guidelines, and any previous policy guidance on
investigating pay discrimination. Directive 307 provides a detailed description
of the process OFCCP compliance officers should follow when reviewing
compensation data during a federal contractor audit. This includes conducting a
preliminary analysis of summary data, analyzing
individual employee level data, and developing pay analysis groups, among other
things. Director Shiu stated that the directive provides "clear guidance for contractors to facilitate their success when it comes to providing equal opportunity to all of their workers."

For
more information about the rescission and Directive 307, visit OFCCP’s website.